Press Releases

Endo Reports Fourth-Quarter And Full-Year 2016 Financial Results

Fourth-quarter 2016 revenues of $1,242 million brings full-year 2016 revenues of $4,010 million to top end of guidance

Company reports $3.5 billion of asset impairment charges in fourth-quarter 2016 associated with the write-down of goodwill and intangible assets primarily related to the Company's Generics reporting unit

"After I was named CEO last September, Endo began a comprehensive strategic review that has resulted in a series of definitive actions. First, we streamlined our global supply chain and restructured our Pain franchise, including the divestiture of BELBUCA™. We then executed a Corporate restructuring and have begun divesting non-core businesses with today's announced sale of Litha Healthcare Group. All of these measures better position Endo to focus on its core assets, drive margin expansion and de-lever over a period of time," said Paul Campanelli, President and CEO of Endo.

"Endo's core assets include a Generics business, which is the fourth largest in the U.S. based on sales, that possesses a growing sterile injectables portfolio and a promising ANDA pipeline. Complementing our generics unit is a revamped specialty Branded business focusing on our flagship product XIAFLEX®. Despite industry headwinds and other challenges, we are excited about our future and have the people, products, and pipeline in place that we believe will enable us, in time, to create value for our shareholders," Mr. Campanelli concluded.

Blaise Coleman, Executive Vice President and Chief Financial Officer, added, "Expected 2017 revenues of between $3.45 billion and $3.60 billion are forecasted to be lower than 2016 revenues primarily due to the expected revenue decline in our Generics base business and legacy Branded pain franchise, as well as the impact of divestitures and product discontinuations. We estimate 2017 adjusted EBITDA from continuing operations of between $1.50 billion and $1.58 billion due, in part, to cost reduction initiatives undertaken in 2016 and early 2017 that have resulted in a significant year-over-year increase in Endo's adjusted EBITDA margin as a percentage of revenue. Finally, estimated 2017 adjusted diluted EPS from continuing operations of between $3.45 and $3.75 is significantly impacted by a higher adjusted effective tax rate and an anticipated increase in variable-rate interest expense."

FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

Three Months Ended
December 31,

Year Ended December 31,

2016

2015

Change

2016

2015

Change

Total Revenues

$

1,241,513

$

1,073,697

16

%

$

4,010,274

$

3,268,718

23

%

Reported Income (Loss) from
Continuing Operations

$

(3,333,325)

$

443,709

NM

$

(3,223,772)

$

(300,399)

NM

Reported Diluted Weighted
Average Shares

222,870

225,321

(1)

%

222,651

197,100

13

%

Reported Diluted Income (Loss)
per Share from Continuing Operations

$

(14.96)

$

1.97

NM

$

(14.48)

$

(1.52)

NM

Adjusted Income from
Continuing Operations

$

395,791

$

307,430

1

29

%

$

1,054,382

$

933,235

1

13

%

Adjusted Diluted Weighted
Average Shares

223,178

225,321

(1)

%

223,090

200,438

11

%

Adjusted Diluted EPS from
Continuing Operations

$

1.77

$

1.36

1

30

%

$

4.73

$

4.66

1

2

%

(1) Refer to footnote 14 in the Reconciliation of GAAP and Non-GAAP Financial Measures tables for the twelve months ended December 31, 2016 and 2015, for further discussion.

CONSOLIDATED RESULTS

Total revenues increased by 16 percent to $1,242 million in fourth-quarter 2016 compared to the same period in 2015, primarily attributable to the launch of key first-to-file generic products, quetiapine and ezetimibe. GAAP net loss from continuing operations in fourth-quarter 2016 was $3,333 million compared to GAAP net income from continuing operations of $444 million during the same period in 2015, primarily attributable to the amount of goodwill and intangible asset impairment charges recorded during fourth-quarter 2016. GAAP net loss per share from continuing operations for the three months ended December 31, 2016 was $14.96, compared to GAAP net earnings from continuing operations of $1.97 in fourth-quarter 2015.

Adjusted net income from continuing operations in fourth-quarter 2016 increased by 29 percent to $396 million compared to fourth-quarter 2015, driven primarily by the contribution of quetiapine and ezetimibe. Adjusted net income per share from continuing operations for the three months ended December 31, 2016 increased 30 percent to $1.77 compared to fourth-quarter 2015.

U.S. GENERIC PHARMACEUTICALS

During fourth-quarter 2016, the U.S. Generic Pharmaceuticals business unit completed the restructuring of its product portfolio as well as its manufacturing facility network, including the divestiture of the Charlotte, North Carolina facility.

Fourth-quarter 2016 U.S. Generic Pharmaceuticals results include:

Revenues of $882 million, a 45 percent increase compared to fourth-quarter 2015; this increase was primarily attributable to the launches of quetiapine extended-release tablets, the generic version of SEROQUEL XR®, and ezetimibe tablets, the generic equivalent of ZETIA®. Par has first-to-file status and associated marketing exclusivity for each product. The introduction of ezetimibe tablets represented the largest product launch in Par Pharmaceutical's history.

Sterile injectables increased 43 percent compared to fourth-quarter 2015; this increase was driven primarily by VASOSTRICT®, which benefited from the market withdrawal of its only competitor's product in 2015.

During fourth-quarter 2016, Endo announced highly statistically significant Phase 2b study results on the primary composite endpoint and all secondary endpoints for XIAFLEX® in patients with cellulite. The Company also announced its intention to return the BELBUCA™ (buprenorphine) buccal film product to its developer, eliminate its U.S. Branded pain sales field force and manage the Company's legacy pain portfolio as mature brands. Endo's U.S. Branded segment will now focus on its core Specialty products, including its flagship product XIAFLEX®, as well as SUPPRELIN® LA, TESTOPEL®, and AVEED®.

Fourth-quarter 2016 U.S. Branded Pharmaceuticals results include:

Revenues of $289 million, a 24 percent decrease compared to fourth-quarter 2015; this decrease was primarily attributable to generic erosion adversely impacting the Company's Pain and Established Products portfolios, including VOLTAREN® Gel, LIDODERM® and FROVA®, along with the divestiture of STENDRA®.

In January 2017, the U.S. Food and Drug Administration announced that it will hold an advisory committee meeting in March 2017 to discuss certain pre- and post-marketing data relating to OPANA® ER, and the overall risk-benefit of that product. The advisory committees will also discuss generic oxymorphone extended-release and oxymorphone immediate-release products.

INTERNATIONAL PHARMACEUTICALS

As with Endo's U.S. businesses, International Pharmaceuticals underwent a product-by-product and business-by-business assessment. Today, the Company announced the divestiture of Litha Healthcare Group to Acino for approximately $100 million. As part of Endo's strategic assessment and comprehensive asset review, the Company determined that Litha no longer aligned with its strategy and was not considered a core asset. The divestiture of Litha helps simplify the Endo organization and permits it to better focus on the core Generics and Specialty Branded Pharmaceutical businesses. The transaction is expected to close in the second quarter of 2017, subject to customary conditions, including the expiration or termination of any waiting periods under applicable competition laws. The final purchase price will be subject to cash, debt, working capital and other potential contractual adjustments.

Endo's International Pharmaceuticals unit continued to effectively manage its business operations in anticipation of the impact of the loss-of-exclusivity for certain Paladin products, during the fourth-quarter 2016, while continuing its efforts to improve adjusted operating margins.

Paladin revenues of $28 million, a 2 percent decrease compared to fourth-quarter 2015, due to expected competition on certain products. In the fourth quarter, Paladin began promoting XIAFLEX® and NUCYNTA® in Canada. Paladin also retains Canadian marketing rights to serelaxin and looks forward to the results of a Phase III clinical trial expected in 2017.

Emerging market revenues from Litha and Somar of $38 million, a 25 percent decrease compared to fourth-quarter 2015, attributable, in part, to a decrease in Litha revenues as the result of the divestiture of non-core assets in first-quarter 2016. Revenues were also impacted by lower demand for certain products in Mexico and the unfavorable impact of foreign exchange.

2017 FINANCIAL GUIDANCE

For the full twelve months ended December 31, 2017, at current exchange rates, Endo is providing guidance on revenue, GAAP and adjusted diluted EPS guidance from continuing operations and adjusted EBITDA from continuing operations. The Company estimates:

Total revenues to be between $3.45 billion to $3.60 billion;

Reported diluted GAAP EPS from continuing operations to be between $0.04 and $0.34;

Adjusted diluted EPS from continuing operations to be between $3.45 to $3.75; and

Adjusted EBITDA from continuing operations to be between $1.50 billion to $1.58 billion.

The Company's 2017 non-GAAP financial guidance is based on the following assumptions:

Adjusted gross margin of approximately 62.0% to 63.0%;

Adjusted operating expenses as a percentage of revenues to be approximately 22.5% to 23.0%;

Adjusted interest expense of approximately $470 million to $480 million;

Adoption of Accounting Standard Update 2016-09 ("ASU 2016-09") in the first quarter of 2017, changing the GAAP reporting of excess tax benefits and deficiencies associated with employee stock-based compensation. The Company estimates there could be at least a $10 million tax detriment (~$0.04 GAAP and Adjusted diluted earnings per share estimated impact) recognized primarily in the first quarter of 2017 when most employee stock awards vest or expire during the year.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of December 31, 2016, the Company had $517.3 million in unrestricted cash; net debt of approximately $7.8 billion and a net debt to adjusted EBITDA ratio of 4.6.

Fourth-quarter 2016 cash provided by operating activities was $81.1 million, primarily attributable to the benefit of no interest payments related to high-yield notes and lower mesh payments during the quarter, offset partially by increases in working capital resulting from the fourth-quarter quetiapine and ezetimibe launches in our generics segment.

During fourth-quarter 2016, the Company conducted an annual goodwill impairment assessment, resulting in a pre-tax, non-cash impairment charge of $2,674 million, including the following items:

$2,342.5 million related to the Generics reporting unit, which represents the difference between the estimated implied fair value of the reporting unit's goodwill and its book value. The impairment charge was driven by a reduction in the expected future cash flows in the Generics reporting unit primarily due to a change in pricing expectations partly driven by an expected increased level of competition and increased buying power from the continued consolidation of the generic business customer base. These charges are primarily due to industry and competitive pressures in the sector, which resulted in a reduction of the Generics reporting unit's fair value.

$272.6 million related to the Paladin Canada reporting unit, was driven primarily by a reduction in pricing expectations and additional generic competitors for several of Paladin's products.

$33.0 million and $26.3 million related to the Somar and Litha reporting units, respectively.

In addition to the Company's goodwill assessment, the Company also incurred pre-tax, non-cash intangible asset impairment charges in the fourth-quarter of approximately $830.3 million, including:

$507.2 million and $285.5 million in our U.S. Generic Pharmaceutical and International Pharmaceutical segments, respectively, resulting from certain market conditions impacting the commercial potential of definite and indefinite-lived intangible assets.

$37.6 million in the U.S. Branded Pharmaceuticals segment primarily resulting from the termination of BELBUCA™ and the return of this product to BioDelivery Sciences International, Inc.

Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this press release today at 8:30 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 58581981. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from February 28, 2017 at 11:30 a.m. ET until 12:30 p.m. ET on March 14, 2017 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 58581981.

A simultaneous webcast of the call can be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 12:30 p.m. ET on March 14, 2017. The replay can be accessed by clicking on the Investor Relations section of the Endo website.

The following table presents Endo's unaudited Net Revenues for the three and twelve months ended December 31, 2016 and 2015:

Endo International plc

Net Revenues (unaudited)

(in thousands)

Three Months Ended December 31,

Percent
Growth

Year Ended December 31,

Percent
Growth

2016

2015

2016

2015

U.S. Generic Pharmaceuticals:

U.S. Generics Base

$

288,142

$

372,417

(23)

%

$

1,230,097

$

1,083,809

13

%

Sterile Injectables

143,905

100,511

43

%

530,805

107,592

393

%

New Launches and Alternative Dosages

450,127

136,267

230

%

803,711

481,015

67

%

Total U.S. Generic Pharmaceuticals

$

882,174

$

609,195

45

%

$

2,564,613

$

1,672,416

53

%

U.S. Branded Pharmaceuticals:

Pain Management:

LIDODERM®

$

21,122

$

40,234

(48)

%

$

87,577

$

125,269

(30)

%

OPANA® ER

38,880

43,610

(11)

%

158,938

175,772

(10)

%

PERCOCET®

36,029

35,181

2

%

139,211

135,822

2

%

Voltaren® Gel

18,612

62,169

(70)

%

100,642

207,161

(51)

%

$

114,643

$

181,194

(37)

%

$

486,368

$

644,024

(24)

%

Specialty Pharmaceuticals:

SUPPRELIN® LA

$

20,793

$

16,926

23

%

$

78,648

$

70,099

12

%

XIAFLEX®

55,530

50,197

11

%

189,689

158,115

20

%

$

76,323

$

67,123

14

%

$

268,337

$

228,214

18

%

Branded Other Revenues (1)

98,330

131,092

(25)

%

411,589

412,369

—

%

Total U.S. Branded Pharmaceuticals (2)

$

289,296

$

379,409

(24)

%

$

1,166,294

$

1,284,607

(9)

%

Total International Pharmaceuticals

$

70,043

$

85,093

(18)

%

$

279,367

$

311,695

(10)

%

Total Revenues

$

1,241,513

$

1,073,697

16

%

$

4,010,274

$

3,268,718

23

%

__________

(1)

Products included within Branded Other Revenues in the table above include, but are not limited to, TESTOPEL®, Testim®, Fortesta® Gel, including authorized generic, and Nascobal® Nasal Spray.

(2)

Individual products presented above represent the top two performing products in each product category and/or any product having revenues in excess of $25 million during the three months ended December 31, 2016 or December 31, 2015.

The following table presents unaudited consolidated Statement of Operations data for the three and twelve months ended December 31, 2016 and 2015 (in thousands, except per share data):

The following schedule presents the significant pre-tax cash outlays and cash receipts impacting our Net cash provided by operating activities for the years ended December 31, 2016 and 2015 (in thousands):

Year Ended December 31,

2016

2015

Payments for mesh-related product liability and other litigation matters (1)

(1) Cash payments into QSFs result in a cash outflow for investing activities (CFI). Cash releases from QSFs result in a cash inflow for investing activities and a corresponding outflow for cash provided by (used in) operating activities (CFO). The following table reflects the mesh-related payment activities for the twelve months ended December 31, 2016 and 2015 by cash flow component:

Year Ended December 31,

2016

2015

Impact on CFO (1)

Impact on CFI

Impact on CFO (1)

Impact on CFI

Cash contributions to Qualified Settlement Funds

$

—

(831,131)

$

—

$

(743,132)

Cash payments to claimants from Qualified Settlement Funds

(1,134,734)

1,134,734

(649,391)

649,391

Cash payments made directly to claimants

(7,830)

—

(27,379)

—

Total

$

(1,142,564)

$

303,603

$

(676,770)

$

(93,741)

(1) These amounts are included in Changes in assets and liabilities which used cash in the table above.

Supplemental Financial Information

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures. For additional information on the Company's use of such non-GAAP financial measures, refer to Endo's Current Report on Form 8-K furnished today to the Securities and Exchange Commission, which includes an explanation of the Company's reasons for using non-GAAP measures.

The table below provides reconciliations of our consolidated income (loss) from continuing operations (GAAP) to our adjusted income from continuing operations (non-GAAP) for the three and twelve months ended December 31, 2016 and 2015:

ENDO INTERNATIONAL PLC

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

(In thousands)

Three Months Ended December 31,

Year Ended December 31,

2016

2015

2016

2015

(Loss) Income from continuing operations (GAAP)

$

(3,333,325)

$

443,709

$

(3,223,772)

$

(300,399)

Non-GAAP adjustments:

Amortization of intangible assets

240,390

227,543

876,451

561,302

Inventory step-up and other cost savings

13,912

117,681

125,699

249,464

Upfront and milestone related payments

2,455

2,092

8,330

16,155

Inventory reserve (decrease) increase from restructuring

(137)

—

24,455

—

Royalty obligations

—

—

(7,750)

—

Separation benefits and other restructuring

37,216

55,151

83,036

125,407

Acceleration of Auxilium employee equity awards

—

—

—

37,603

Charges for litigation and other legal matters

(4,765)

17,207

23,950

37,082

Asset impairment charges

3,518,085

139,859

3,781,165

1,140,709

Acquisition-related and integration costs

8,356

36,112

63,778

170,890

Fair value of contingent consideration

(956)

17,961

23,823

(65,640)

Non-cash and penalty interest charges

—

1,965

4,092

8,267

Other

(1,836)

27,501

(7,273)

130,165

Tax adjustments

(83,604)

(779,351)

(721,602)

(1,177,770)

Adjusted income from continuing operations (non-GAAP)

$

395,791

$

307,430

$

1,054,382

$

933,235

__________

Refer to the following tables for additional information regarding non-GAAP financial measures.

ENDO INTERNATIONAL PLC

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

(In thousands, except per share data)

Three Months Ended December 31, 2016

Total revenues

Cost of revenues

Gross margin

Gross margin %

Total operating expenses

Operating expense to revenue %

Operating loss from continuing operations

Operating margin %

Other non-operating expense, net

Loss from continuing operations before income tax

Income tax benefit

Effective tax rate

Loss from continuing operations

Discontinued operations, net of tax

Net loss attributable to Endo International plc (14)

Diluted loss per share (15)

Reported (GAAP)

$ 1,241,513

$ 756,578

$ 484,935

39 %

$ 3,779,494

304 %

$ (3,294,559)

(265)%

$ 111,043

$ (3,405,602)

$ (72,277)

2 %

$ (3,333,325)

$ (4,531)

$ (3,337,856)

$ (14.96)

Items impacting comparability:

Amortization of intangible assets (1)

—

(240,390)

240,390

—

240,390

—

240,390

—

240,390

—

240,390

1.08

Inventory step-up and other costs savings (2)

—

(13,912)

13,912

—

13,912

—

13,912

—

13,912

—

13,912

0.06

Upfront and milestone-related payments (3)

—

(655)

655

(1,800)

2,455

—

2,455

—

2,455

—

2,455

0.01

Inventory reserve decrease from restructuring (4)

—

137

(137)

—

(137)

—

(137)

—

(137)

—

(137)

—

Separation benefits and other restructuring (5)

—

(9,284)

9,284

(27,932)

37,216

—

37,216

—

37,216

—

37,216

0.17

Charges for litigation and other legal matters (6)

—

—

—

4,765

(4,765)

—

(4,765)

—

(4,765)

—

(4,765)

(0.02)

Asset impairment charges (7)

—

—

—

(3,518,085)

3,518,085

—

3,518,085

—

3,518,085

—

3,518,085

15.79

Acquisition-related and integration costs (8)

—

—

—

(8,356)

8,356

—

8,356

—

8,356

—

8,356

0.04

Fair value of contingent consideration (9)

—

—

—

956

(956)

—

(956)

—

(956)

—

(956)

—

Other (11)

—

—

—

—

—

1,836

(1,836)

—

(1,836)

—

(1,836)

(0.01)

Tax adjustments (12)

—

—

—

—

—

—

—

83,604

(83,604)

—

(83,604)

(0.38)

Exclude discontinued operations, net of tax (13)

—

—

—

—

—

—

—

—

—

4,531

4,531

—

After considering items (non-GAAP)

$ 1,241,513

$ 492,474

$ 749,039

60 %

$ 229,042

18 %

$ 519,997

42 %

$ 112,879

$ 407,118

$ 11,327

3 %

$ 395,791

$ —

$ 395,791

$ 1.77

Three Months Ended December 31, 2015

Total revenues

Cost of revenues

Gross margin

Gross margin %

Total operating expenses

Operating expense to revenue %

Operating loss from continuing operations

Operating margin %

Other non-operating expense, net

Loss from continuing operations before income tax

Income tax benefit

Effective tax rate

Income from continuing operations

Discontinued operations, net of tax

Net loss attributable to Endo International plc (14)

Diluted earnings per share (15)

Reported (GAAP)

$ 1,073,697

$ 810,068

$ 263,629

25 %

$ 467,142

44 %

$ (203,513)

(19)%

$ 149,715

$ (353,228)

$ (796,937)

226 %

$ 443,709

$ (562,302)

$ (118,463)

$ 1.97

Items impacting comparability:

Amortization of intangible assets (1)

—

(227,543)

227,543

—

227,543

—

227,543

—

227,543

—

227,543

1.02

Inventory step-up and other costs savings (2)

—

(117,681)

117,681

—

117,681

—

117,681

—

117,681

—

117,681

0.52

Upfront and milestone-related payments (3)

—

(1,089)

1,089

(1,003)

2,092

—

2,092

—

2,092

—

2,092

0.01

Separation benefits and other restructuring (5)

—

(40,304)

40,304

(14,847)

55,151

—

55,151

—

55,151

—

55,151

0.24

Charges for litigation and other legal matters (6)

—

—

—

(17,207)

17,207

—

17,207

—

17,207

—

17,207

0.08

Asset impairment charges (7)

—

—

—

(139,859)

139,859

—

139,859

—

139,859

—

139,859

0.62

Acquisition-related and integration costs (8)

—

—

—

(36,112)

36,112

—

36,112

—

36,112

—

36,112

0.16

Fair value of contingent consideration (9)

—

—

—

(17,961)

17,961

—

17,961

—

17,961

—

17,961

0.08

Non-cash and penalty interest charges (10)

—

—

—

—

—

(1,965)

1,965

—

1,965

—

1,965

0.01

Other (11)

—

—

—

(3,079)

3,079

(24,422)

27,501

—

27,501

—

27,501

0.12

Tax adjustments (12)

—

—

—

—

—

—

—

779,351

(779,351)

—

(779,351)

(3.47)

Exclude discontinued operations, net of tax (13)

—

—

—

—

—

—

—

—

—

560,762

560,762

—

After considering items (non-GAAP)

$ 1,073,697

$ 423,451

$ 650,246

61 %

$ 237,074

22 %

$ 413,172

38 %

$ 123,328

$ 289,844

$ (17,586)

(6)%

$ 307,430

$ (1,540)

$ 306,020

$ 1.36

Notes to the reconciliation of certain line items included in the GAAP Statements of Operations to the Non-GAAP line items are as follows:

(1) Adjustments for amortization of commercial intangible assets included the following:

(2) Adjustments for inventory step-up and other cost savings included the following:

Three Months Ended December 31,

2016

2015

Fair value step-up of inventory sold

$

9,669

$

109,746

Excess manufacturing costs that will be eliminated pursuant to integration plans

4,243

7,935

Total

$

13,912

$

117,681

(3) Adjustments for upfront and milestone-related payments to partners included the following:

Three Months Ended December 31,

2016

2015

Cost of
revenues

Operating
expenses

Cost of
revenues

Operating
expenses

Sales-based milestones

$

655

$

—

$

1,089

$

—

Development-based milestones

—

1,800

—

1,003

Total

$

655

$

1,800

$

1,089

$

1,003

(4) To exclude decreases of restructuring related excess inventory reserves of $0.1 million recorded during the three months ended December 31, 2016.

(5) Adjustments for separation benefits and other restructuring included the following:

Three Months Ended December 31,

2016

2015

Cost of
revenues

Operating
expenses

Cost of
revenues

Operating
expenses

Separation benefits

$

6,150

$

21,772

$

40,304

$

1,828

Accelerated depreciation

3,134

5,729

—

10,361

Other

—

431

—

2,658

Total

$

9,284

$

27,932

$

40,304

$

14,847

(6) To exclude litigation settlement charges or reimbursements.

(7) To exclude goodwill and intangible asset impairment charges. During the three months ended December 31, 2016, we recorded total impairment charges of $3.5 billion. These charges primarily related to the Company's annual goodwill impairment assessment, which resulted in non-cash impairment charges of $2,343 million, $273 million, $33 million and $26 million for its U.S. Generics, Paladin, Somar and Litha reporting units, respectively. Intangible asset impairment charges of $830 million primarily included non-cash impairment charges of $507 million and $285 million in the Company's U.S. Generic Pharmaceuticals and International Pharmaceuticals segments, respectively, resulting from certain market conditions, including price erosion and increased competition, and $38 million in our U.S. Branded Pharmaceuticals segment resulting primarily from the termination of our BELBUCA™ product. During the three months ended December 31, 2015, we recorded impairment charges of $140 million resulting primarily from a non-cash goodwill impairment charge of $86 million related to our Paladin reporting unit, non-cash intangible asset impairment charges of $38 million related to our U.S. Generic Pharmaceuticals segment and $10 million related to our U.S. Branded Pharmaceuticals segment.

(8) Adjustments for acquisition and integration items primarily relate to various acquisitions, including Par Pharmaceuticals and Auxilium Pharmaceuticals, and included the following:

Three Months Ended December 31,

2016

2015

Integration costs (primarily third-party consulting fees)

$

6,441

$

17,892

Transaction costs

—

8,498

Transition services

—

8,858

Other

1,915

864

Total

$

8,356

$

36,112

(9) To exclude the impact of the change in fair value of contingent consideration resulting from certain market conditions impacting the commercial potential of the underlying products.

(12) Adjusted income taxes are calculated by tax effecting adjusted pre-tax income at the applicable effective tax rate that will be determined by reference to statutory tax rates in the relevant jurisdictions in which the Company operates and includes current and deferred income tax expense commensurate with the non-GAAP measure of profitability.

(13) To exclude the results of the Astora business reported as discontinued operations, net of tax.

(14) This amount includes non-controlling interest of $(130) for the three months ended December 31, 2015.

(15) Calculated as income (loss) from continuing operations divided by the applicable weighted average share number. The applicable weighted average share number for the three months ended December 31, 2016 is 222,870 and 223,178 for the GAAP and non-GAAP EPS calculations, respectively. The applicable weighted average share number for the three months ended December 31, 2015 is 225,321 for both the GAAP EPS calculation and the non-GAAP EPS calculations.